San Diego's Financial Troubles Are as Old as the City Itself

Anyone who lives in the City of San Diego is painfully aware of the financial troubles that are facing the city. If you don't live here, you may have caught wind of the problems anyway, since they often make national headlines. The city has been at the brink of financial disaster for years. Rising pension costs and retiree health care benefits are at the top of the current problems, along with falling revenues from property and sales taxes. Regardless of the issues at any given time, the city seems to be unable to break free from the chains of excessive debt and poor financial management.

I took a recent trip to the San Diego Public Library to look into the financial problems that plagued the founding of the city. I was surprised to learn that the financial problems that we are facing today are not new. In fact, the city was facing many of the same issues when it was incorporated in 1850. Only two years later, in 1852, the State of California repealed the city charter and ordered that a Board of Trustees take control of the rampant mismanagement of the city.

In a San Diego Herald newspaper article, dated February 28, 1852, the following anonymous statement was printed to urge San Diegans to voice their opinions about the new form of government:

"A little less than two years ago, with some twelve or thirteen thousand dollars in the treasury, and when land speculation was rife throughout the State, our precocity showed itself in a wonderful manner; splendid fortune from sudden rises in real-estate... (several words illegible)... and turtle soup dinners were feasted on with most voracious appetite. Our virgin village made her debut and took her place among her sister cities of the State. But alas! Like everything else abortive, she soon dropped and withered as a newly planted flower. With an empty treasury and in debt deeply - with nothing to show for it but a half-finished skeleton of a house, which stands alone on a gloomy spot by a gloomy roadside, to frighten the solitary traveler at night, with its naked ribs and ghostly appearance, we return to "first principles," "redeemed, regenerated and disenthralled."

After I left the library, I paid a visit to the office of the City Clerk. There, amongst their archives, I found the following letter. It is a statement that was made in 1852, and is a testament of two members of the Finance Committee. In order that they retire for the summer without a cloud of guilt over their heads, they make an official statement that they are at an "utter loss" to make any sense of the financial state of the city.

"To the Honorable President and Members of the Common Council,

The Finance Committee of the Common Council of the year 1852 being about to retire with all other Offices of the City from their Office. Would respectfully represent that they used every endeavor upon their part to ascertain the financial condition of the City, but owing to the unsettled accounts of the treasurer of 1850 and the manner in which the accounts of the City have been kept, that they are at an utter loss to give any report upon the assets or debts of the City.

Respectfully,

(William Leamy)"

This was the birth of the City of San Diego, which would later be named "America's Finest City" only to be renamed "Enron by the Sea" a few years later. The first scandals of the city quieted down, and people moved on and prospered. We can only hope that the city will suffer the same fate this time around. Perhaps today's financial problems will be as forgotten as the crisis of 1852.

Sources:
The San Diego Herald, Betrayal of the City Charter, February 28, 1852
Letter to the San Diego Council, by William Leamy February 28, 1852